Market failure threatens a decline for the UK while the global industry booms

Canada and other territories provide a model for long term growth. In recent years, Quebec has invested $500m in tax credits to generate an estimated $1.5bn in inward investment by just a few global games firms. The industry believes that new commitments by Government will result in dividends in terms of jobs and new investment.

Richard Wilson, CEO of Tiga, the trade association representing independent games software developers: “With a 20% production tax credit – like that approved by the EU and found in France – we could create many new, high value jobs, millions of pounds in new investment, and promote closer collaboration between industry and education. Without real measures to turn the tide, we’ll see our best people follow the money overseas to where governments are more willing to invest in the future. A great British industry could become a dead man walking, just like the British film industry before Government gave it a tax credit. We must act now if the UK games industry is to remain a global leader”.

The problem – High costs and low government assistance will lead to job losses and falling investment

• Major competitor territories offer substantial industry-specific assistance but UK studios get little support.

• Canada, France, Australia and US offer either games-specific tax credits, subsidies or higher access to finance, and are winning more inward investment.

• The UK is struggling to compete on uneven international playing fields and our home-grown talent is being targeted and wooed by competitor countries.

• Without substantial support, the UK studio sector will shrink, resulting in 1,700 jobs losses and more than $180m of falling investment in UK studios.

• This shrinkage is already starting to cause loss of ‘critical mass’ with key industry-supporting businesses such as testing moving offshore.

The solution – EU-approved production tax credits

• A games production tax credit for games that pass the cultural test, on the same EU-approved grounds as the French games production tax credit (20%).

• Maximise the number of games businesses that can benefit from the R&D tax credit scheme.

• Create an environment for a new generation of entrepreneurial studios to find finance, start-up and create more world-class games.

How industry will help – growth and new investment

• With a production tax credit, the industry expects to invest an additional $220m over five years in British jobs.
• With a tax credit, staff numbers will rise to a total of 11,500 in five years.
• Drive new games, start-new studio start-ups and new inward investment into the UK.